Is 2019 the Year of Peak Satellite?

It appears 2019 could be the peak year for satellite TV services globally, as Rethink Technology Research believes subscribers will begin a permanent decline in 2020, with a loss of about 15 million accounts by 2024, on a current base of about 225 million.

Still, that represents a cumulative loss of about six percent to seven percent over five years, a rate of attrition executives in the telecom industry have dealt with before. In other words, the transition away from linear TV services--using fixed or satellite networks--will be a longish, slowish transition reminiscent of the decline of international long distance revenue, fixed line voice or text messaging.

source: Rethink Research

Consider a simple five-year estimate of revenue changes in the U.S. telecom market. Revenue changes less than one percent, but the volume of revenue from growing and declining contributors changes from negative five percent to positive 24 percent.

Basically, voice and messaging revenues drop, while data revenues, business segment and video entertainment revenues climb.

source: Analysys Mason

As former Cisco CEO John Chambers was always fond of saying, transitions are the key to success. “Market transitions wait for no one,” Chambers said. In 2011, perhaps it would have been thought unremarkable to assert that “voice will be free.”

In 2000, at the very peak of U.S. long distance revenue, it might have seemed more outlandish.

source: FCC

Of course, that was only part of his thinking. "It wasn’t just voice that will commoditize and be free. Data transport will commoditize and be free and then video will commoditize and be free,” Chambers has argued, referring to the transmission business, not the content business.

How Big is the SD-WAN Market?

One clear issue for markets with enterprise (customer-owned) and service provider (network service) segments is that overall combined forecasts can mislead. That has been very clear with the software-defined wide area network (SD-WAN) market, which has a distinct enterprise segment (organizations buy their own equipment to provision) and a managed service business (carrier supplies the service).

Forecasts of the balance between the private and managed service portions of the SD-WAN market vary substantially. Some believe most of the business will be private.

Between now and 2020, the service provider managed SD-WAN business will grow, but the enterprise-owned SD-WAN business might grow faster. By some estimates the managed services business will be about six percent of the total market by 2020.

Others think the SD-WAN business will be a mix, roughly in equal parts, of private implementations and managed services. Yet others believe managed services will represent most of the revenue, eventually.  

source: P&S Market Research

Average Household Data Consumption Reaches 274 GB

The OpenVault Broadband Industry report, a quarterly report that reflects broadband usage based on the aggregate consumption of millions of subscribers in the United States and Europe, shows that overall average monthly data usage reached a new high of 273.5 GB in the first quarter of 2019, a year-over-year increase of 27 percent over the first quarter 2018 monthly average of 215.4 GB.

Internet-only subscribers consumed 395.7 GB, more than 120 GB more than the average subscriber and almost double the 209.5 GB consumed by households that purchase a bundle of video and Internet services.

The percentage of power users, defined as subscribers who consume 1 TB or more of data per month, doubled to 4.2 percent of all subscribers in Q1 2019 from 2.1 percent in Q1 2018.

“Power users of the future,” described as tusers exceeding 2 TB of consumption each month,  more than doubled to 0.38 percent in Q1 2019 from 0.16 percent the year prior.

Western Europe Telco Subscription TV Share Will Reach 56% in 2024

Telcos will account for 56 percent of Western Europe’s linear subscription TV subscribers by 2024, according to Digital TV Research.

source: Digital TV Research

Digital TV Research predicts that cable TV will have 40.28 million subscribers by 2024; IPTV 38.72 million; and pay satellite TV 20.33 million subs. IPTV is the only one of these expected to make gains over the forecast period.

Half of the 18 countries covered by the report are tipped to lose subscription TV subscribers between 2018 and 2024 with Italy and the UK to see the biggest declines, losing 728,000 and 621,000 subscribers respectively.

By 2024, Germany is expected to account for 25 percent of Western Europe’s subscription TV subscribers, the UK for 15 percent and France for 14 percent.

About 2% of Consumers Tracked by OpenVault Buy Gigabit Service

Looking at internet service provider data generated by OpenVault in the United States and Western Europe, about 1.85 percent  of subscribers tracked by OpenVault buy gigabit-speed service.

Some 3.5 percent buy services running between 300 Mbps and 500 Mbps, while seven percent buy service at speeds between 200 Mbps to 300 Mbps.

About 65 percent buy services running  between 50 Mbps and 150 Mbps.

A reasonable person might guess that the percentage of customers buying speeds of at least 200 Mbps, up to 1 Gbps, is higher in the United States than Western Europe, largely because cable TV operators, which sell the highest speeds, dominate the U.S. market.

The mid-range Comcast Xfinity services, for example, seem to run at speeds up to 200 Mbps or 250 Mbps  across most of its markets.

source: OpenVault

Home Prices and Broadband: Correlation and Causation

Does the quality of broadband service affect home prices in the United Kingdom, and if so, what is the impact? In some surveys, conducted in 2014 and since indicate consumers would pay more for a home with fast broadband.

Likewise, studies of the link between broadband and economic growth show correlation, at the very least. One study by the World Bank noted that “almost every study, despite the methodology and whether it was cross-country or single country, found a positive economic impact from fixed broadband.”

First of all, note the language: “correlation,” not “causation.”

Also, the “results were sometimes not statistically significant (particularly for developing countries).” In those cases, even correlation cannot be assumed.

A study conducted by the Public Policy Institute of California likewise notes a “positive relationship between broadband expansion and economic growth.”

But “the data and methods do not definitively indicate that broadband caused this economic growth,” the institute says. Still, some claim a causal relationship.

And some studies suggest U.S. home prices might also be affected in the same way, some suggesting difference in value could be three percent to as high as 20 percent.

source: Univerisity of Wisconsin Extension

But “correlation does not necessarily equal causation,” say some researchers studying broadband and home prices.

It is possible that fiber availability drives real estate prices upwards. It also is possible that other  variables “may jointly determine both real estate prices and fiber presence.

“Residential properties in markets with high-speed broadband access would be expected to have greater value,” they say. “However, good quality broadband infrastructure is also expected to be rolled out first in high-income areas with high-valued real estate.”

Logic suggests there is some room for such effects in areas with highly-variable internet access service and virtually zero effect in areas where fast internet is ubiquitous.

Some studies suggest there is a relationship between home prices and fast broadband. But lots of variables, including age, income or wealth and race also are correlated with home prices.

A recent study by Housesimple in the United Kingdom looked at the relationship between low-speed broadband and faster broadband within a single postcode. That study shows significant differences on particular streets.

Address	Postcode	Average broadband speed on the street (Mbps)	Current average house price, street (£)	Current average house price, postcode district (£)	% difference - prices on street vs postcode district
Poplar Avenue, Oldham, Greater Manchester	OL8 3TZ	0.221	105,977	116,033	-8.7
St David's Close, Worksop, Nottinghamshire	S81 0RP	0.290	107,819	185,936	-42.0
Milton Road, Cowplain, Waterlooville, Hants	PO8 8LD	0.338	270,134	329,028	-17.9
Cross Lane, Bebington, Wirral, Merseyside	CH63 3AD	0.354	195,553	231,846	-15.7
The Willows, Acaster Malbis, York, NYorks	YO23 2XE	0.463	215,593	356,282	-39.5
May Tree Lane, Waterthorpe, Sheffield, SYorks	S20 7HA	0.467	108,782	185,681	-41.4
Turnpike Road, Connor Downs, Hayle, Cornwall	TR27 5DT	0.483	282,182	256,084	10.2
Rothbury Gardens, Plymouth	PL6 8TU	0.492	241,516	224,665	7.5
Lancaster Road, Out Rawcliffe, Preston	PR3 6BN	0.549	236,558	262,371	-9.8
Moseley Wood Gardens, Cookridge, Leeds	LS16 7JB	0.551	250,796	339,084	-26.0
Blackstone Avenue, Glasgow	G53 5DW	0.669	90,834	165,505	-45.1
Fosbrooke Road, Small Heath, Birmingham	B10 9JS	0.679	147,905	153,421	-3.6
York Crescent, Stourbridge	DY8 4RT	0.718	226663	224,042	1.2
Graham Park, South Dell, Isle of Lewis	HS2 0SP	0.718	86,679	118,718	-27.0
Coppice Farm Park, St. Leonards, Tring	HP23 6LG	0.719	211,333	556,974	-62.1
Oak Close, Little Stoke, Bristol	BS34 6RA	0.831	230,314	259,671	-11.3
Maesyrhendre, Ammanford, Carmarthenshire, Wales	SA18 2BW	0.839	81,399	142,626	-42.9
Phoenix Boulevard, York	YO26 4WX	0.853	250,205	305,653	-18.1
Gratrix Lane, Sowerby Bridge, Calderdale, SYorks	HX6 2PX	0.922	123,098	188,444	-34.7
Laburnum Drive, Milton of Campsie, Glasgow	G66 8HY	0.948	196,328	198,557	-1.1

source: Housesimple

The research revealed that house prices were on average 24 percent lower on the streets with the slowest broadband speeds, about £182,983 compared to £240,031 for the postcode district.

What we do not know is whether there are other explanations for lower house prices on those streets.